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Transferring a Company Retirement Account

August 02, 2017
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If you have ever changed jobs, there is a chance you left your retirement account behind. If you are changing jobs right now, you have some options about the company retirement account. You might want to get some good advice.
Are you changing jobs, retiring or is your company retirement plan shutting down? If the answer is yes to any of these, be sure the assets roll into an eligible retirement account instead of having them paid to you. That way you avoid any tax consequence. And the money continues to enjoy tax-deferred earnings.
More than a quarter of people take the money out of their retirement plan and either spend it or put it in non-retirement investments, according to a 2016 Employee Benefit Research Institute and Greenwald and Associates survey.
Experts disagree, but many sources say that the average American will change jobs as many as seven times before retirement. If you empty your retirement account every time you move, you will be in a pretty big hole come retirement time.
There are a few common reasons why people spend their retirement savings before retirement. Most common is because of a gap between jobs. If a family has no emergency fund, they may be forced to consumer retirement savings to pay the bills between jobs. Many families tend to live beyond their means and when they change jobs, they take the money from the retirement account and pay down debt as they start the new job.
And many people don't spend the money, they just forget about it. Making the arrangements to move retirement money after you've left a job can be daunting, particularly if you are not familiar with or comfortable with the idea of making investment decisions.
Rolling over retirement plan assets can be a complicated matter, so approach any move carefully to avoid unwanted penalties. If you were born before 1936, special tax benefits are available to you if you choose not to rollover your distribution from a qualified plan. Despite when you were born, it may be in your best interest to consult with your financial advisor to help make the best decision for you.
Dunncreek Advisors helps clients understand the difficult decisions around moving your old retirement accounts. If you are in St. Paul, Minnesota and need help with an old retirement account, or any questions about planning your financial future, call Dunncreek Advisors. As fee-only, fiduciary advisors, we work as your advocate to make sure you do the smart thing with you money.
If this article has you thinking about and old retirement account, contact my office at rdunn@dunncreekadvisors.com. I am always happy to meet with people who have questions about their retirement plans. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.